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This post covers Modeling Techniques, one of the types of tools & techniques used in the final planning process under Schedule Management, process 6.6 Develop Schedule.

1. What-If Scenario

The purpose of the technique is to refine the schedule model by accounting for the effect of various risks or scenarios on the project schedule, such as: What will happen if there is a delay in the delivery of a major component?

The idea is that the effect on the project schedule of various scenarios or risks are assessed. How vulnerable is the schedule to these adverse conditions? Can contingencies or response plans be prepared to reduce the impact to the schedule of these various adverse conditions? Contingency reserves that pay for these contingencies or response plans may be needed to be added to the project estimate to get the cost baseline.

If the scenario is tied to a certain activity or stage of the project, and that scenario does not occur, then the contingency reserves tied to that scenario may be deemed no longer necessary, and can be used to reduce the cost baseline. Also, the potential negative impact on the schedule may be deemed no longer necessary, which can be used to reduce the range for the duration of that particular activity.

This shows that, as the risk on a project gets reduced throughout a project, this also reduces the uncertainty in both the budget and the schedule.

2. Simulation (Monte-Carlo Analysis)

A three-point estimate gives a range of durations for each activity, the tP or pessimistic estimate, the tO or optimistic estimate, and the tM or most likely estimate. What happens when you get a large number of activities, each with their own set of three estimates for the activity durations? How do you determine the likely duration of the project of the whole?

One way is through simulation, which takes the various activities and performs a calculation simulating various possible outcomes for each activity, and then based on this simulation of the individual activities, calculates the possible outcome for the overall project. The most common form of simulation of this type is Monte Carlo analysis. When you are doing a problem in the form of Estimated Monetary Value in risk management, you are doing a very simple form of this simulation using only two scenarios. If you can imagine extending this type of calculation for scenarios involving hundreds or more activities, you can get an idea of what the Monte Carlo analysis does and why it takes a computer to figure it out.

3. Conclusion

These modeling techniques offer a layer of refinement to the estimate of the duration of the schedule by showing the affect of risk. This is important because it not only makes the schedule more robust, i.e., able to be executed under adverse conditions, but can also become a tool in managing the risk on the project as well as its schedule.

The next tool and technique to be reviewed is that of leads and lags. Unlike modeling techniques, leads and lags are a tool that lends itself to questions involving calculation on the exam.